Subsidize: to furnish with a subsidy: as a: to purchase the assistance of by payment of a subsidy b: to aid or promote (as a private enterprise) with public money <subsidize soybean farmers> <subsidize public transportation>

Credit card users who crow that they're seldom charged interest on purchases because they pay their bills on time may not be able to crow much longer. President Obama is about to sign into law new restrictions on the credit card industry that lenders say may lead to the return of widespread annual fees.

I know many of you feel entitled to use a credit card without any cost because you diligently and responsibly pay off the bill before the due date. But did you ever stop to think what that is?

You probably never considered that the credit pushers made your access to "free" money possible by gouging the less fortunate with hideous penalty fees and wicked double-digit interest rates. Effectively, the most financially vulnerable consumers have subsidized the low interest rates and rewards programs that the more financially secure enjoy.

I know what some of you may be thinking: "Good for me; too bad for them. That's how capitalism works."

Right you are. That is how capitalism works. And at times it's a selfish system.

We live in a society where many people who do well can't sympathize with those who don't. We've created a culture in which people live by "I pulled myself up by my own bootstraps" or "I got mine; it's up to you to get yours."

The recent push in Congress to halt some of the industry's most egregious practices was aimed at helping less-fortunate consumers buried under credit card debt. Certainly many lower- and middle-income people irresponsibly racked up unnecessary charges, but others resorted to credit to pay for medical expenses because they lacked health insurance. They were using credit to buy groceries or make needed car repairs so they could get to work.

Demos, a nonpartisan public policy research and advocacy group, took a look at which credit card users were the worst hit by credit card practices. In a report called "The Winners and Losers of Credit Card Deregulation," the organization pointed out that low-income and lower-middle-income cardholders were about five times more likely than the wealthiest cardholders to pay more than 20 percent interest.

The Demos report separated credit card users into four categories:

-- Nonusers, who have credit cards but do not use them.

-- Convenience users, who accumulate balances each month but pay them in full without incurring interest charges or fees.

-- Revolvers, who accumulate balances each month without paying in full and as a result incur monthly interest charges.

-- Late payers, who miss deadlines or skip payments altogether, accumulating balances and incurring high interest charges and late fees.

The revolvers and late payers are the credit card industry's most lucrative customers. While I don't necessarily disagree with the idea that lenders should be allowed to charge more to customers who are higher credit risks, many of the fees and high interest rates imposed on such borrowers are predatory and unfairly deepen people's debts.

Now that Congress has sent Obama a bill intended to rein in unfair credit card practices, it won't be long before the industry responds with new or old ways to make up for lost revenue.

Already the language from the lenders is pitting so-called "good" credit card users against "riskier" ones.

"Those who have managed their credit well and currently have very good credit card deals will find that card companies are limited in their ability to distinguish between them and those that have credit problems," Edward L. Yingling, president and chief executive of the American Bankers Association, said in a brief written statement after the legislation passed. "The result will be some subsidy from those that manage their credit well to those that have problems, affecting negatively the terms the former will receive."

Yingling added that the "new rules will limit the ability of card companies to price according to risk."

No, they won't. There's nothing in the law to prevent the companies from charging higher interest rates to irresponsible or riskier borrowers. What the industry is lamenting is that they won't be able to continue gouging lower- to middle-income cardholders. It means these people won't be subsidizing convenience users.

This change won't be easy for some, as evident from the following comment I received from a reader during a recent online discussion. The person wrote: "I am fortunate enough to be able to pay off my credit card bills in full every month and on time. I am concerned that, with the new legislation, my American Express annual fees will go up and I will get asked to pay annual fees on the MasterCard and Visa, both of which are now free."

No, those cards were never free.

-- By mail: Readers can write to Michelle Singletary at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071.

Comments and questions are welcome, but because of the volume of mail, personal responses are not always possible. Please note that comments or questions may be used in a future column, with the writer's name, unless a specific request to do otherwise is indicated.

So then apparently the logical thing to do is to not penalize the people who deserve it and penalize those who have earned it? Pulling myself up by my bootstraps is actually an antiquated and unamerican concept now? While I am certainly for eliminating predatory lending (as I voted yes on the limitation to place caps on payday loaners here in Ohio), why don't you just *gasp* deny credit to those who can't afford it? Much like houses and cars should have been denied to the same people who couldn't afford them (thus we would have prevented what we are going through now). If they don't have credit they may actually have to, hang on now, live within their means!

Here's the thing about human nature that government can never control (unless we end up moving into some Orewellian model): People will always do what they will do. There will always be favorites and nepitism regardless of a union or no. There will always be insider trading and embezzlement regardless of law. People will always get guns despite restrictions. And, despite us being in an economic hardship with rising unemployment, people will always do dumb stuff to get themselves fired. Thus, the accursed rich will always buy more/more expensive items and pay their bills on time. And subsequently, the faultless poor or unorganized will always accumulate fees and late payments. Always. Human nature has always been taking a mile out of an inch. That is what spurs our ingenuity on the good end and our corruption on the bad.

Thus this bill which is yet another shot fired in the class warfare will actually accomplish very little as it will not wipe out bad debt and will, possibly as intended, curb "rich spending" which then takes more money out of the economy. If I catch up my bills and pay on time, I should expect to be treated like a preferred customer. It is my right I have earned. This bill as the article describes treats the most responsible of us as nothing but a base, moronic human beings incapable and undeserving of preferential treatment.

Personal Opinion: Credit reform is in fact needed, but like many of the bills and taxes passed by the party of this one's sponsor, it promotes class warfare and degrades Americans as being undeserving and incapable people. It turns us all into creatures of no gumption as we are denied reward if successful and face no penalty if we fail. We must hate those who have succeeded and never strive to do the same for ourselves. I will in fairness place here, too, that I would rip this story and bill the same if it was coming from the other side of the aisle. The concept of it, while of good intent, ultimately treats us like slack-jawed, irresponsible peasants.

If I work hard, I deserve a reward. It is insulting for this reporter to tell me I don't deserve better in life for succeeding on my own and being a responsible human being. Maybe she should consider this the next time she is denied a raise for her hard work because the new intern just starting should be paid the exact same as her "to be fair".

Ahem, I'm no flamer so refutes are welcome. Especially I don't intend to execute this thread with my opinion. =)

_________________We are what we're supposed to be:illusions of your fantasy.All dots and lines that speak and say,"What we do is what you wish to do."

It is a non issue for me since I rarely use it at all anyway and always make sure the bill is paid in full for the times I do, and that is why I don't deal with interest. I am mostly with the nonuser section with a toe in the convenience user category. I keep money in a savings account for "emergencies". A part of my income goes in there to make sure I have something.

The entire corporate system of america is a devious, selfish, lying bastard that never gives you what it promises and hides its fine print somewhere that you can't see, then of course if you question them they send you to customer service based in a small village near mt everest where you'll be put on hold for 45 minutes. Most everything that comes with a monthly fee mysteriously goes up after 3 months and then costs you $300 to get out of it because you signed a 'contract'. Credit cards are just the tip of it, I personally just don't use them anymore. I have no problem saving up money and blowing it on whatever, better to buy $2,000 worth of beany babies and owe nothing than to charge $500 worth of heating oil (at 19% interest) and pay $5,000 for it after all is said and done. And boy don't ever fill out those great cash advance checks they constantly send you, that's like 22% interest, it's so evil, at least the guy who mugs you on the corner only steals from you once and goes away.

wow that was bitter, I think I need a hug.

Last edited by Metric on Mon May 25, 2009 11:27 am, edited 1 time in total.

Credit Card companies are not as devious and evil as the government makes you believe. Remember, they are in business to make a profit, and by making a profit they are able to expand, hire employees (ie- create jobs), and by expanding credit they are able to let us get some things we'd normally not be able to obtain.

However, by extending credit, they are exposing themselves to risk of being defaulted on, this is why we are charged interest rates, to compensate for the risk they take. It is not the responsibility of the lender to make sure that the lendee isn't a complete idiot when it comes to being fiscally responsible. That being said, lenders SHOULD make sure the lendee fully understands the terms of their loans (something that didn't happen with the housing market and those ridiculous ARMs that were handed out like they were candy).

Now, its not like lenders have TOTALLY screwed over the american people and walked away benefiting from our misfortune. Quite the opposite, lenders are hurting just as much if not MORE than the general public due to this lending crisis. Yes, the lenders made huge mistakes by lending with ridiculous terms, but the lendee made huge mistakes by actually AGREEING to these terms. Let's look at it honestly for a second, do you think these banks would have made the loans they did if they HONESTLY believed they would be defaulted upon in such staggering numbers? I think not.

Basically, the moral of the story is this: Know the terms of any credit you have, and use that credit wisely. Remember, if you get ridiculously over your head in debt, you only have one person to blame: yourself.

(PS - I am a convenience Credit Card user. I pay my balance off in full at every paycheck. I never operate in debt, being in debt just stresses me out.)

believe it or not at 32 i've never had a credit card (at least i think im 32, hmm), unless you count debit/check cards that come right out of your account. I had a nice debt free life till the moment I got married and BANG over $10,000 in credit card debit and like $500 a month minimum payment :p I/we spent like 8 years paying that, getting it down like friggin 80 bucks a month or something ridiculus, such a money pit. Essentially we were paying for clothes my wife had bought every friday and put on her credit card, NEW OUTFIT FOR THE WEEKEND! Stuff that was probably all thrown away within the first couple years I knew her. But shiny happy ending it's all paid and gone now due to tax refund and things related to house buying. Those cards are safely hidden away from womanly view and financial happiness prevails.. sorta >.>

Credit cards are necessary for improving your credit of course, we probably never would of got this house or current car without paying on that stupid non-reducing debt for a decade +

_________________Life's for the living so live it or you're better off dead.\PSN ID: Daymos256Steam: Daymos256

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